Second thoughts on the 'Thought Experiment'
Hugo Salinas Price
Let's get down to the fundamental question which would be on the minds of the Utah State Legislature, should the proposal come before them, to receive taxes and other revenue in the form of "rounded-up" silver dollar coins at a value quoted by the Utah State Treasury.
That question would have to be: "What does the State Treasury do with the silver dollars received, if the value of silver tanks?" That would be the No. 1 question!
I am afraid that the answer cannot be favorable. I prefer to face this question honestly, and admit a failure of the "Thought Experiment". After all, it was an “experiment”!
I am quite sure that silver bullion will continue to rise in terms of FRNs given the present dismal financial picture of the US Government and banking system. However, that is my personal opinion and not a solid theoretical argument. It would not be wise for the State Treasury to gamble on a rising price of silver.
Thus I have to fall back on my original position, upon which I stand firm with no qualms, that the monetization of a silver coin in the US - be it the silver dollar or the "Eagle" - is something that must take place at the Federal, National level.
Supposing that the State Treasury is simply willing to receive silver dollars or “Eagles” in payment of taxes, at their market value; they might be willing to do this, and it would be a helpful measure toward the recuperation of silver as money. In which case, they should hedge their silver position in the futures markets, to protect against falls in the price of silver. This seems to me the most that can be done. The willingness of the Utah Treasury to accept silver would send a good message that would elevate the stature of silver among the population.
So, back to the drawing board! I have shot myself down.
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